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Tags Posts tagged with "prospective payment system"

prospective payment system

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The Centers for Medicare and Medicaid Services (CMS) has released the fiscal year (FY) 2027 inpatient rehabilitation facility prospective payment system (IRF PPS) proposed rule.

The proposed rule includes some technical proposals that would modify the IRF coverage and documentation requirements as well as IRF QRP submission deadlines. The proposed rule does not include any proposals to modify the existing IRF transfer policy. The proposed rule does, however, include several Requests for Information (RFI) that could indicate potential future impactful changes.

On the FY 2027 payment side, the rule would provide an overall 2.8% increase to estimated payments per discharge, compared to the 2.6% payment update that CMS finalized for FY 2026.

FY 2027 Payment Updates

  • Aggregate Estimated Payment Increase: 2.8% / $355 million (field-wide)
  • Market Basket Update (with Productivity Adjustment): 2.4%
  • Labor-Related Share: 74.5%
  • Standard Payment Conversion Factor: $19,881
  • Outlier Threshold: $8,689 (from $10,141 in FY 2026)

FY 2027 Coverage, Payment, and Documentation Policy Changes

Initiation of Therapy Requirement
CMS proposes to clarify the requirement that therapy be initiated within 36 hours of midnight of the day of admission to the IRF.

Documenting Function in Preadmission Screen
CMS proposes to expand the elements required in the preadmission screening (PAS) to include “current functional status” as well as prior level of function.

Timing of Interdisciplinary Team Meeting
CMS proposes to tighten the requirement for the timing of the weekly interdisciplinary team meeting by requiring an initial interdisciplinary team meeting to occur “on or before the fourth day from midnight on the date the patient is admitted” and subsequent team meetings to occur “at least once per week after the date of the prior team meeting.”

Request for Information on Future IRF Payment Reform
The rule includes an extensive Request for Information (RFI) on future IRF payment reform, specifically two major areas of reform:

  1. Refining the current IRF patient classification system by creating a draft list of IRF-specific clinical categories; and
  2. Creating a new system of comorbidity scoring to better account for the severity and number of comorbidities for IRF patients.

The RFI does not propose any of these changes be implemented in FY 2027 but requests stakeholder feedback on both areas. CMS also references two new technical reports addressing their PPS changes under consideration; these are available for download as part of the rule’s associated data files here.

FY 2027 Quality Reporting Program Updates

Proposal to Revise Data Submission Deadlines for the IRF QRP
For the FY 2029 IRF QRP, which will be based upon Calendar Year 2027 data, CMS is proposing to reduce this timeline to the “15th day of the second month following the end of calendar quarter.”

The proposed rule will be published in the Federal Register on April 6, 2026. Comments on the proposed rule are due by June 1, 2026.

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On September 24, 2025, WellSky will be conducting a webinar on the fiscal year (FY) 2026 inpatient rehabilitation facility prospective payment system (IRF PPS) final rule that was released by the Centers for Medicare and Medicaid Services (CMS) in early August. The webinar will begin at 12:00 pm. There is no cost to participate in this webinar.

Topics will include:

  • The key changes in the 2026 IRF Final Rule impacting reimbursement;
  • The technical changes and their indirect effects on your program;
  • The amendments to the QRP and the appeal process; and
  • The latest concerns about potential IRF reimbursement denials.

To participate in the webinar, register here.

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Last week, the Centers for Medicare and Medicaid Services (CMS) released the Fiscal Year (FY) 2026 Inpatient Rehabilitation Facility (IRF) Prospective Payment System (PPS) proposed rule, as well as an accompanying fact sheet. The rule does not include proposed changes to the IRF coverage requirements. On the payment side, the rule would provide an overall 2.8% increase to estimated payments per discharge, compared to the 2.5% payment update that CMS finalized for FY 2025. The rule is more substantive with respect to the future Quality Reporting Program (QRP) changes. Specifically, the rule proposes to remove certain quality measures and standardized patient assessment data elements (SPADE) implemented in recent years relating to COVID-19 vaccination and social determinants of health (SDOH), and to modify the process for reconsideration of IRF QRP non-compliance penalties. Finally, the rule includes various requests for information (RFI), soliciting feedback on the IRF QRP and IRF-Patient Assessment Instrument (PAI).

The proposed rule will be published in the Federal Register on April 30, 2025. RCPA will provide a more detailed overview of the proposed rule following this date. Comments on the rule are due to CMS by June 10, 2025.

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The Centers for Medicare and Medicaid Services (CMS) released and published the fiscal year (FY) 2025 inpatient rehabilitation facility prospective payment system (IRF PPS) final rule in the August 6, 2024, Federal Register. Some of the key provisions contained in the provider rule are noted below.

Payment Updates

CMS estimates aggregate payments to IRFs will increase by 2.8 percent in FY 2025, compared to the 4.0 percent payment update that CMS finalized for FY 2024. This update is the result of an annual market basket update, reduced by a productivity adjustment, budget neutrality adjustments for changes to CMG weights and labor/wage changes, and adjustments to the outlier case threshold.

As in previous years, CMS will adopt new delineations for the Core-Based Statistical Areas (CBSA) as identified by the Office of Management and Budget (OMB). [Additional and more detailed information on these new CBSAs can be found in OMB Bulletin No. 23-01] These changes will result in certain counties being reclassified from urban to rural and vice-versa, as well as some counties shifting to different CBSAs. As a result, CMS projects that approximately 10 percent of providers will have a higher wage index, but 16 percent will face a decrease in wage index values (primarily for those reclassified as urban, thus losing the rural adjustment). Thus, CMS finalized a transitional “phase-out” policy for those negatively impacted, such that IRFs set to lose their rural adjustment will retain two-thirds of the adjustment in FY 2025, one-third of the adjustment in FY 2026, and fully “lose” the rural adjustment in FY 2027. CMS estimates that 8 IRFs would be reclassified as urban and thus lose the 14.9 percent rural adjustment.

CMS increased the outlier threshold amount from $10,423 for FY 2024 to $12,043 for FY 2025 (slightly lower than the proposed rule’s projection). This change will account for an estimated 0.2 percent decrease to aggregate payments across the IRF PPS in FY 2025.

Quality Reporting Program (QRP) Updates

CMS finalized its proposal to adopt four new items as Standardized Patient Assessment Data Elements (SPADE) under the social determinants of health (SDOH) category beginning with the FY 2028 IRF QRP: one Living Situation item; two Food items; and one Utilities item. CMS notes that these new SPADES are intended to assist IRFs in “better addressing those identified needs with the patient, their caregivers, and community partners during the discharge planning process, if indicated.”

Transportation Item Modification Finalized Beginning with the FY 2028 IRF QRP (October 1, 2026 Implementation)

Consistent with the AHC HRSN Screening Tool, CMS finalized a proposal to modify the A1250. Transportation item currently collected in the IRF–PAI in two ways: (1) revise the look-back period for when the patient experienced lack of reliable transportation; and (2) simplify the response options.

  • A1250. Transportation currently collected in the IRF-PAI asks: “Has lack of transportation kept you from medical appointments, meetings, work, or from getting things needed for daily living?” The response options are: (A) Yes, it has kept me from medical appointments or from getting my medications; (B) Yes, it has kept me from non-medical meetings, appointments, work, or from getting things that I need; (C) No; (X) Patient unable to respond; and (Y) Patient declines to respond.
  • The finalized Transportation item asks, “In the past 12 months, has a lack of reliable transportation kept you from medical appointments, meetings, work or from getting things needed for daily living?” The final response options are: (0) Yes; (1) No; (7) Patient declines to respond; and (8) Patient unable to respond.

Finalized Proposal to Remove the Admission Class Item From the IRF-PAI Beginning October 1, 2026, with Minor Modification

  • CMS asserts that the Admission Class Item is currently not used in the calculation of quality measures already adopted in the IRF QRP. It further notes that it is not used for previously established purposes unrelated to the IRF QRP, such as payment, survey, or care planning. This removal will be effective beginning with the FY 2028 IRF QRP (beginning with patients admitted on October 1, 2026); however, IRFs will not be required to collect this item beginning with patients admitted on October 1, 2024.

For additional information, CMS published a fact sheet that provides an overview of the provisions contained in the final rule.

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